A good year for Chinese economy

In March 2022, the Chinese government set a target of 5-5.5 percent GDP growth for the year. At the time, such growth levels appeared perfectly attainable. But within a month, the Omicron variant arrived, triggering strict lockdowns that, while stemming the spread of the coronavirus, caused serious damage to the supply and demand sides of the economy. China's growth rate for 2022 was just 3 percent.

Today, however, things are looking up for China's economy. Following the government's rapid shift away from its zero-COVID policy in December — and especially since the middle of last month — the economy has sprung back to life. This renewed vitality was on display during the Spring Festival holiday in late January, when more than 300 million Chinese hit the road, up 23 percent from last year.

There are good reasons to expect significantly higher growth in 2023. For starters, the headline rate will reflect the low base in 2022. Given 4.8 percent average GDP growth in 2019-22, a back-of-the-envelope calculation suggests that China should be able to achieve GDP growth of around 6 percent in 2023.